Flight Capital as a Portfolio Choice
33 Pages Posted: 14 Feb 2006
Date Written: December 1999
Abstract
This paper sets flight capital in the context of portfolio choice, focusing upon the proportion of private wealth that is held abroad. There are large regional differences in this proportion, ranging from 5 percent in South Asia to 40 percent in Africa. We explain cross-country differences in portfolio choice by variables that proxy differences in the risk-adjusted rate of return on capital. We apply the results to four policy questions: how the East Asian crisis affected domestic capital outflows; herd effects; the effect of the IMF-World Bank debt relief initiative for heavily-indebted poor countries (HIPC) on capital repatriation; and why so much of Africa's private wealth is held outside the continent.
Keywords: Capital flight, portfolio choice
JEL Classification: G11, F21, F32, F34, O16
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Flight Capital as a Portfolio Choice
By Paul Collier, Anke Hoeffler, ...
-
A Theory of Expropriation and Deviations from Perfect Capital Mobility
By Jonathan Eaton and Mark Gersovitz
-
By S. Ibi Ajayi
-
By James K. Boyce and Leonce Ndikumana
-
Country Risk and the Organization of International Capital Transfer
By Jonathan Eaton and Mark Gersovitz
-
Public Debts and Private Assets: Explaining Capital Flight from Sub-Saharan African Countries
By Leonce Ndikumana and James K. Boyce
-
Optimal Incentives to Domestic Investment in the Presence of Capital Flight
By Assaf Razin and Efraim Sadka
-
Optimal Incentives to Domestic Investment in the Presence of Capital Flight
By Assaf Razin